Economics and current events, no-tweets: food prepared by the consumer unit

The Something Awful Forums > Discussion > Ask/Tell > Business, Finance, and Careers > Economics and current events, no-tweets: food prepared by the consumer unit

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Baddog: May 12, 2001

LanceHunter posted:

I would think that the slowing growth would be a signal that interest rates would be dropping sooner. But yeah, market doesn't seem happy.

Would be taken a lot better if we hadn't also just gotten a bad inflation reading. Putting a lot of doubt on these "soft landing achieved!" storylines all of a sudden.

# ? Apr 25, 2024 18:30

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# ? May 2, 2024 04:13

Hadlock: Nov 9, 2004

Is Jamie angling for a seat on the federal reserve board

https://www.reuters.com/markets/us/jpmorgan-ceo-dimon-says-us-economy-is-booming-2024-04-23/

quote:

“I would like to see practitioners go back to the government,” Dimon said during the address.

The Reuters report added that Dimon’s name has been floated for senior economic roles in the government and that he said during an interview at The Economic Club of New York, “I want to help my country.”

# ? Apr 25, 2024 19:03

pmchem: Jan 22, 2010

Hadlock posted:

Is Jamie angling for a seat on the federal reserve board

https://www.reuters.com/markets/us/jpmorgan-ceo-dimon-says-us-economy-is-booming-2024-04-23/

lol. try SecTreas

# ? Apr 26, 2024 00:51

Baddog: May 12, 2001

pmchem posted:

lol. try SecTreas

I think he's got a big enough head to go for president in 4 years.

# ? Apr 26, 2024 01:11

hypnophant: Oct 19, 2012

Baddog posted:

I think he's got a big enough head to go for president in 4 years.

As a dem or republican

# ? Apr 26, 2024 14:59

Hadlock: Nov 9, 2004

Interesting I guess he asked to be treasure sec during the Obama administration but they instead promoted the at the time undersecretary (t geithner) to sec

TG went on to chair a private equity firm in 2014, which jamie's chase then invested a billion+ dollars in, in 2016

# ? Apr 26, 2024 21:10

Baddog: May 12, 2001

hypnophant posted:

As a dem or republican

quote:

Dimon also gave Trump credit for his policy record.

"Take a step back, be honest. He was kind of right about NATO, kind of right on immigration. He grew the economy quite well. Trade tax reform worked. He was right about some of China."

I guess dimon isn't in manufacturing, obviously. But the back and forth with all the trade wars, off and on, really hosed up supply chains. Even with Mexico. Going back to that sort of randomly changing policy week to week isn't actually good for companies trying to make stuff.

Baddog fucked around with this message at 00:54 on Apr 27, 2024

# ? Apr 27, 2024 00:45

hypnophant: Oct 19, 2012

Baddog posted:

I guess dimon isn't in manufacturing, obviously. But the back and forth with all the trade wars, off and on, really hosed up supply chains. Even with Mexico. Going back to that sort of randomly changing policy week to week isn't actually good for companies trying to make stuff.

this ain't a politics thread, but it's almost unimaginable that dimon could run as a dem, and it's only barely more plausible that he could run as a republican. We'll see what they turn into after trump, but there's almost as much hostility to big banks on the right as there is on the left, and he runs the biggest. I don't see him ever doing better than bloomberg.

# ? Apr 27, 2024 02:03

Keyser_Soze: May 5, 2009; Pillbug

Dimon is on CNBC occasionally and last time was basically full of stuff like "Trump wasn't that bad and his ideas were great I mean look at the border and taxes and regulations!"

...also the "Last Call" guy on CNBC Brian Sullivan seems to want to return to Fox Business and chud it up.

Keyser_Soze fucked around with this message at 02:45 on Apr 27, 2024

# ? Apr 27, 2024 02:43

Hadlock: Nov 9, 2004

hypnophant posted:

this ain't a politics thread, but

Per the OP

quote:

Global economics and related current events

The CEO of the largest bank in America running for federal office, would fall under this heading

If it were the CEO of the week at Intel, that would probably be out of scope

# ? Apr 27, 2024 03:33

Hadlock: Nov 9, 2004

https://fortune.com/2024/04/26/inflation-stagflation-ubs-economy-federal-reserve-jerome-powell-unemployment-recession/

quote:

stagflation

This is a pretty specific question, and I'm looking for a specific answer, how does stagflation impact investment banks, specifically. Not stock brokers or the stock market, actual investment banks where they do private financing for companies, M&A~~, American Psycho stuff~~

Hadlock fucked around with this message at 22:28 on Apr 27, 2024

# ? Apr 27, 2024 22:23

Lockback: Sep 3, 2006; All days are nights to see till I see thee; and nights bright days when dreams do show me thee.

Hadlock posted:

https://fortune.com/2024/04/26/inflation-stagflation-ubs-economy-federal-reserve-jerome-powell-unemployment-recession/

This is a pretty specific question, and I'm looking for a specific answer, how does stagflation impact investment banks, specifically. Not stock brokers or the stock market, actual investment banks where they do private financing for companies, M&A~~, American Psycho stuff~~

Like how does it impact their behavior?

So investment banks are always going to try to beat the market. In a stagflation market they will be less likely to be looking at financing startups, and there is going to be less "traditional" M&A activity as everyone is going to be getting more cautious. HOWEVER, you they will pivot to is distressed assets. Companies that are well run but caught with their pants down, municipal bonds, chapter 7s. Depending on what the market looks like you might see more consolidation M&A moves, two companies that are struggling merge to stay afloat. The M&A market is actually not awful when the economy is bad. It's usually at it's worst when things are uncertain, but bad economy means activity still.

I think more importantly is what the treasury does to combat something like stagflation (which I think is super premature to start hand wringing about, some rockiness should be expected). If there is a lot of competition from "safe" treasuries then yeah investment banks are going to have to get really selective. But a lot of money is also waiting for lower interest rates so I have no idea

All that said, while employment is so high there's a ton that can happen before actual stagflation.

# ? Apr 27, 2024 22:51

Borscht: Jun 4, 2011

In broadest terms, yields go down. Which means you reduce how much money you spend on your revenue generating arm to keep it consistent with the revenue end.

# ? Apr 28, 2024 16:51

GhostofJohnMuir: Aug 14, 2014; anime is not good

rational reminder had michael green on to discuss the potential for systemic risk due to passive investing

lot of food for thought in this one. apologies for the large post, but i'm trying to seriously work through the arguments because it goes against many of my priors and the general consensus

quoting what i think are a couple of key points from michael

quote:

So, what you've done is you've increased the proportion of market participants that are truly valuation insensitive, or price insensitive is another way to think about it. As a result, what you've done is you've actually increased the inelasticity of the market. The ability for prices to change in response to relatively small changes in supply and demand. That's really the primary dynamic. You removed that historical filter in which investors would react to higher prices by saying all else equal, the information content that I've now received is that future returns will be lower. Therefore, I'm more willing to sell.

For passive investors, you actually receive the opposite signal. As the price goes higher, relative to other securities, it becomes relatively more attractive. It's presumed that there's information content there. As a result, you actually allocate more capital to those names that have gone off the most.

quote:

As you push values higher and higher and higher, and you concentrate the resources in vehicles, like the Vanguard total market index that carries no cash whatsoever, it's a $1.6 trillion fund that carries $80 million in cash. If an active manager were to come into your office and say, �We're running a $1.6 trillion fund with $80 million of cash�, you would throw them out of your office and say, �Don't ever talk to me again.� That's completely irresponsible. But we look at that with Vanguard, and we're like, �Oh, yes, of course, this is the safe way for people to invest.� So, the problem occurs when people try to take money out. When they try to take that money out, Vanguard has no choice but to turn to the market for that liquidity. The scale of these entities are now at the size that just like the XIV, you could actually cause yourself to exhaust the order book and a crash to commence.

quote:

Their tests show that the largest companies, those that make up the top of the S&P 500 or the Nasdaq-100, paradoxically, are the least elastic. And as they become larger and larger, and the index becomes concentrated amongst those names, the indices themselves, the markets themselves are becoming significantly less elastic.

quote:

Cameron Passmore: Why are flows into a cap-weighted index fund different from flows into the overall aggregate of active which obviously holds the market?

Mike Green: So, first of all, that's not obviously true. The second part of your statement that all active managers match all passive managers in aggregate, is an untrue statement that's predicated on the idea of fully complete markets with no regulation that doesn't have requirements around diversification, et cetera. That's honestly just a misframing of the reality that, unfortunately, gets repeated over and over and over again.

Look at some of the most successful investments until very recently would be entities like the Tiger Funds that were very active in non-public equities. There's non-public equities. There's non-public real estate. There's non-public companies. There's non-public debt. None of those can actually be represented within the indices. So, it's really quite disingenuous. Actually, use the language of Bill Sharpe and say that they�re just the same thing, because they're not. The second component is that it's not really so much that you're waiting on the basis of market capitalization, although, that does have a disconnect. This is again, under the academic work of JP Bouchaud, who showed who highlights that liquidity does not scale with market capitalization. It scales with volume and volatility.

The market cap is only peripherally related to volume and volatility. If I looked at the number of shares and quantity of trading from Microsoft, for example, relative to Delta Airlines, while their market capitalizations are roughly 100 times different, their trading volumes are only about five times different. That's actually a by-product of market structure, how trading activity actually occurs. If I'm a market maker, I have to put capital up against trades to facilitate those trades. The profitability of that capital is determined by the spread between the bid-ask and the quantity of shares that are being traded. If there's only five times as many shares being traded on Microsoft, and it has a tighter bid-ask spread than Delta Airlines, then it's less profitable for me to put capital up against Microsoft in proportion to its market capitalization.

As a result, it actually becomes less liquid, or more inelastic is the easiest way to think about it. When you try to shove through trades in the size that you have to for a market cap-weighted index, it overwhelms and actually causes those names to rise more than they otherwise would be expected to.

quote:

The real issue again, and just go back to the diversification component, it's hugely valuable to have people transact for different reasons. You may want to buy a house, therefore you sell. I may look at a valuation and say, �Well, that's too high. Therefore, I'm going to sell.� Somebody who has even more conviction may say, �Wow, that valuation is so crazy. I'm going to short it and synthetically make more shares available for people.� That's what shorting really is. That diversity creates robustness within the market. Really, all we're describing with the growth of passive and more importantly, the regulatory support for the growth of passive, is that we're effectively narrowing down the diversity and heterogeneity of the marketplace and making it more and more homogeneous into a group of strategies that basically boiled down to, did you give me cash? If so, then buy. Did you ask for cash? If so, then sell.

quote:

So, under the Pension Protection Act of 2006, we switched 401(k)s from opt-in frameworks. In other words, you had to choose to participate to opt-out frameworks. In other words, you had to choose not to participate. That was a substantive change in the market that was done under lobbying from primarily Vanguard and BlackRock.

The second key change was the designation of qualified default investment alternatives. So, if you're going to default somebody into participating, you have to put them into something. It actually turned out that the vast majority of people or not the vast majority, but many people, when they chose to participate in their 401(k), would look at the plethora of choices available to them and say, �Man, I have no idea,� and just hold cash.

So, the QDIA changed that. It started to force people into the market and therefore led to far greater participation. Interestingly enough, when that was done in 2006, that led to the explosion of the growth of firms like PIMCO, that could manage balanced funds that combined bonds and equities into a single product. That was then replaced as the Qualified Default Investment Alternative, QDIA in 2012, by target date funds. Today, I want to say the number is somewhere in the neighborhood of 95 cents of every retirement dollar in the United States now flows into a target date fund.

quote:

Because of the growth of passive. It's not because active managers have a harder job or because there's fewer idiots out there, et cetera. There's plenty of idiots. Just look at GameStop. But what we're actually experiencing as a market that is being distorted from the growth of passive. As that becomes larger over time, it creates this exponential curve of rising valuations, that in turn forces mechanically the alphas lower for active managers, which causes us to fire the active managers because they're idiots, and replace them with the oh-so-efficient passive investing, which further exacerbates the problem.

quote:

Now, perversely, we're at the same stage, we bought ourselves capacity by changing the markets from cap-weighted to float-adjusted cap weights. But now we've exhausted it. So, we're seeing the same underlying behaviour, and people are, of course, waking up and saying, �Hey, this whole value thing, boy, that was stupid. I should be a momentum investor. I should be a technology investor. Just get me some of that sweet, sweet AI stuff and I'm going to be rich like Croesus.� Right now, ironically, all they're doing is accelerating the termination point. But that's what's underway right now.

quote:

So, doing things like buying call options, which historically had delivered significantly negative returns, now actually largely offer positive returns, because the market has shifted in that drift feature. That would be one way that you incorporate it. You embed long-term or you embed call option-type strategies that capture elements of this drift and are candidly not properly priced for those underlying dynamics.

The other way that you identify this or you deal with this is you recognize that the information content that we're receiving on the health of the economy, and the health of individual securities is actually wrong. It's being corrupted by these underlying dynamics. That's trickier because it effectively requires you to start saying, �Where do I start to bet against this? Where do I think this starts to unwind?� Now, my models would suggest that what this largely means is that markets are increasingly reliant on employment, that contribution from 401(k)s, and ultimately, that you start unwinding this process. Again, it is really tricky because there's multiple levels to thinking through how this plays out.

quote:

That is the core issue. And most people have kind of woken up to the giant joke. You can't allow a retirement system to fail, and the US markets have become our retirement system. So, the US government is going to be forced to intervene. Now ironically, if we know that the US government is going to be forced to intervene, that makes us more comfortable investing, therefore, we push prices up higher, which in turn means a larger sell-off is required for the US government to intervene, and how the game plays out. And that moral hazard, I got to be honest with you, is beyond my IQ.

my initial impression listening to the interview, which has been bolstered by reading the transcript, is that the essential problem michael is seeing is not so much an inherent function of passive or index investing, but that the last 40 years and the last decade especially have been a lesson that there is no alternative to equities for significant long term real returns, especially in comparison to the flatlining real value of your lifetime human capital. the regulatory and general philosophical shifts of the 70's and 80's which put a pointed emphasis on shareholder value over both management and labor, combined with increased access to the market, simultaneously allowed and forced everyone to become shareholders to an extent not previously seen

i can see how passive investing has helped facilitate this trend by offering a convenient vehicle to access the market, but in a scenario where there is a mass liquidation of 401ks it's hard for me to picture how there wouldn't be liquidity crisis leading to a historical market crash even if everyone was actively investing in an older style portfolio with holdings in a dozen or so in random companies based on some kind of fundamental analysis. to my mind if everyone is eating their seed corn the problem is going to be the extent of excess valuations and leverage, not liquidity

i guess if we hit a point where the withdrawals of retirees is greater than the contributions of the labor force there would be a long term liquidity problem, but again i'm not entirely sure how everyone holding bespoke portfolios would solve this

i'm not entirely sure what to make about the arguments that alpha is more difficult to achieve, because the whole reason index/passive investing is viable as a product is because achieving consistent alpha on an individual basis (even considering gross, not net) was so vanishingly rare that it was likely down to random chance

i don't know, i wouldn't be surprised if i'm missing something, but i don't see how it's passive funds specifically that are the problem here

# ? Apr 30, 2024 20:17

bob dobbs is dead: Oct 8, 2017; I love peeps; Nap Ghost

is this guy talking a book? he does prop research, it says?

e: yeah, it says he works at a non-index etf dealio

https://www.simplify.us/

also that he worked for both peter thiel and george soros lol

# ? Apr 30, 2024 20:25

Leperflesh: May 17, 2007

Ghost, I think you've hit on the key things. Active investment companies are and have been whining about how the activity of the passive investment juggernaut funds eats their lunch, and it's technically correct to point out that those index funds don't actually evaluate companies or buy & sell on the basis of value, they just buy cap weighted indexes which has the effect of bidding up everything in the index forever in a very low-volatility way. So there's this claim that the capacity for a flash crash is massively reduced when 70% of the shares of everything are held by an entity that is literally not allowed to sell off until the end of the day. (As an aside, I wonder if anyone's looked into how ETFs erode that smoothing effect? Are ETFs growing compared to mutual funds?)

But I can't agree. Share prices aren't actually determined by a majority of shareholders, they're determined by the most active participants in the market - whoever is buying and selling right this second, regardless of relative volume to total outstanding shares - and if the last ten people who still actively trade decide today that all ten want to sell tesla and none of them want to buy tesla, the price will tank regardless of the index funds sitting on the side. Until the end of the day when they have to rebalance to correct market cap weight and they all sell too. So I'm skeptical of the statement that with index funds holding a huge proportion of shares of the big companies this automatically means they're inflated in price and aren't responsive to the news.

Anyway, as you said, under what scenario do america's retirees suddenly liquify their portfolios of index funds? The boomers are literally in the highest spend years of their retirement right now, when medical costs are at or near their worst, and yet they're not liquidating.

Also I guess most retirees in target date funds are like 50%+ bonds and he seems to only be discussing equities, at least with the clips of the discussion you posted. So I guess now I think about it, this "liquidation scenario" would have to be more the actively working rather than the retired demographic. What proportion of all index funds are held by those still in the "mostly equities" phase of their target date funds? Keeping in mind that the total dollar amount of retirement portfolios curves steeply upwards in the final years of work, as those are usually the highest paid years...

Still there's some interesting stuff in there.

quote:

You can't allow a retirement system to fail, and the US markets have become our retirement system. So, the US government is going to be forced to intervene.

Ignoring the IMO unfounded presumption that this system is definitely going to fail, I think he's right that it is "too big to fail" and I'm curious what that sort of government intervention could possibly look like.

# ? Apr 30, 2024 20:39

Hadlock: Nov 9, 2004

GhostofJohnMuir posted:

my initial impression listening to the interview, which has been bolstered by reading the transcript, is that the essential problem michael is seeing is not so much an inherent function of passive or index investing, but that the last 40 years and the last decade especially have been a lesson that there is no alternative to equities for significant long term real returns, especially in comparison to the flatlining real value of your lifetime human capital.

Pension funds etc have been investing in commercial and residential real estate quite heavily; commercial less so the last 3.5 years. They petitioned the government to allow for special REIT tax rules

GhostofJohnMuir posted:

i guess if we hit a point where the withdrawals of retirees is greater than the contributions of the labor force there would be a long term liquidity problem, but again i'm not entirely sure how everyone holding bespoke portfolios would solve this

I would think inflation would increase to balance this sell off of assets, possibly initially in healthcare wage cost but rapidly expanding beyond there

# ? Apr 30, 2024 20:53

Femtosecond: Aug 2, 2003

Wild stuff to me that TSLA laid off pretty much their entire supercharging division and the new cars division.

https://www.theverge.com/2024/4/30/24145133/tesla-layoffs-supercharger-team-elon-musk-hard-core

quote:

According to an email first reported by The Information and then Electrek, the automaker�s senior director of EV charging Rebecca Tinucci is leaving the company on Tuesday, alongside most of the 500-person team she oversaw. Tesla�s head of the new vehicles program, Daniel Ho, is also out along with his team. These cuts come in addition to the recent 10 percent workforce reduction � and Musk�s email leaves room for more.

...

Tinucci was notably responsible for the rollout of Tesla�s Supercharger network during her six years at the company, including efforts to get other companies to adopt the North American Charging Standard (NACS) developed by Tesla. In his email, Musk says Tesla will still build new Superchargers and complete those already under construction.

Others impacted by the new layoffs include Daniel Ho, a ten-year Tesla veteran who served as director of vehicle programs and new product initiatives, and as program manager for the Model S, 3, and Y vehicles. Most of the public policy team led by former head of policy and business development Rohan Patel (who left the company during the previous wave of layoffs) are also being let go.

....

I guess no new innovations in charging and Tesla is just going to coast from here on out.

I don't understand where the growth comes from if the uhhh "new vehicles program" team is gone. Just gonna iterate on Model 3 until robotaxis save the company?

# ? May 1, 2024 01:34

TooMuchAbstraction: Oct 14, 2012; I spent four years making
Waves of Steel
Hell yes I'm going to turn my avatar into an ad for it.; Fun Shoe

I'm gonna assume that this is driven more by Musk's feelings (especially, whatever he's going through after his baby turned out to be a flaming turd) than it is about anything to do with running an effective company. It could even be "fire the people who are being effective because they're making me look bad", though that is extremely speculative.

# ? May 1, 2024 01:56

Leviathan Song: Sep 8, 2010

I think one of the mistakes people tend to make when panicking about index investing is to equate past non-index investing with active investing. Before index funds became trendy there were still a lot of passive investors that would buy 1 or a small number of stocks and hold onto them for decades. The market was always determined by a small number of investors with most people along for the long haul. Applying the pareto principle, I'll consider it a concern when we get past 80% index funds. A natural market is always going to be determined by the most active 20%.

# ? May 1, 2024 02:05

Hadlock: Nov 9, 2004

Femtosecond posted:

I guess no new innovations in charging and Tesla is just going to coast from here on out.

I don't understand where the growth comes from if the uhhh "new vehicles program" team is gone. Just gonna iterate on Model 3 until robotaxis save the company?

Arguably this worked for GM if you look at their A, B and C body platform, which were all designed in the mid 1920s and survived mostly unchanged until the mid 1980s, and in the case of the B body all the way until 1996 when front wheel drive finally forced an upgrade

https://en.wikipedia.org/wiki/General_Motors_C_platform_(RWD)

If you look at the interior of a 1961 Cadillac and a 1987 the interiors are virtually identical and even today cars typically go 7+ years between major redesigns

# ? May 1, 2024 02:18

drk: Jan 16, 2005

Leperflesh posted:

Share prices aren't actually determined by a majority of shareholders, they're determined by the most active participants in the market - whoever is buying and selling right this second, regardless of relative volume to total outstanding shares - and if the last ten people who still actively trade decide today that all ten want to sell tesla and none of them want to buy tesla, the price will tank regardless of the index funds sitting on the side. Until the end of the day when they have to rebalance to correct market cap weight and they all sell too.

Market cap weighted index funds wouldn't need to sell at the end of the day, the value of their holdings would have decreased in proportion to the market cap change already

# ? May 1, 2024 02:58

Ubiquitus: Nov 20, 2011

Hadlock posted:

Arguably this worked for GM if you look at their A, B and C body platform, which were all designed in the mid 1920s and survived mostly unchanged until the mid 1980s, and in the case of the B body all the way until 1996 when front wheel drive finally forced an upgrade

https://en.wikipedia.org/wiki/General_Motors_C_platform_(RWD)

If you look at the interior of a 1961 Cadillac and a 1987 the interiors are virtually identical and even today cars typically go 7+ years between major redesigns

But the only other option here is cost savings to sell more at a lower price point. The cars are already basically hollow, and unless Tesla just locked up new battery chemistry along with somehow the supply chain for them, there doesn�t seem to be any feasible method to that.

Not to mention market competition for EVs is high

# ? May 1, 2024 03:01

Lockback: Sep 3, 2006; All days are nights to see till I see thee; and nights bright days when dreams do show me thee.

If the new car division was the one responsible for the cyber truck then firing them is too good for them.

# ? May 1, 2024 03:07

Jenkl: Aug 5, 2008; This post needs at least three times more shit!

Leviathan Song posted:

I think one of the mistakes people tend to make when panicking about index investing is to equate past non-index investing with active investing. Before index funds became trendy there were still a lot of passive investors that would buy 1 or a small number of stocks and hold onto them for decades. The market was always determined by a small number of investors with most people along for the long haul. Applying the pareto principle, I'll consider it a concern when we get past 80% index funds. A natural market is always going to be determined by the most active 20%.

Well put! I've been trying to find a succinct way to put this, and now I have.

I think the concerns often attributed to index funds (some kind of mass panic/liquidity event) is just a consequence of the ease of investing and the speed information spreads. The person trying to convince you of this almost always works for active managers.

# ? May 1, 2024 03:07

Ubiquitus: Nov 20, 2011

Lockback posted:

If the new car division was the one responsible for the cyber truck then firing them is too good for them.

There�s only one person stupid enough on this planet to will the cyber truck into existence

# ? May 1, 2024 03:12

drk: Jan 16, 2005

Femtosecond posted:

Wild stuff to me that TSLA laid off pretty much their entire supercharging division and the new cars division.

https://www.theverge.com/2024/4/30/24145133/tesla-layoffs-supercharger-team-elon-musk-hard-core

I guess no new innovations in charging and Tesla is just going to coast from here on out.

I don't understand where the growth comes from if the uhhh "new vehicles program" team is gone. Just gonna iterate on Model 3 until robotaxis save the company?

I think thats pretty much it - go in as much as possible on the high risk ventures, even if it is a big risk to Tesla (or at least Elon's tenure as CEO there).

Also a substantial amount of Elon's net worth depends on Tesla being seen as a tech company, not an automobile manufacturer. Unfortunately for him, building electric cars is far easier than building magic taxis and humanoid robots

# ? May 1, 2024 03:12

Leperflesh: May 17, 2007

drk posted:

Market cap weighted index funds wouldn't need to sell at the end of the day, the value of their holdings would have decreased in proportion to the market cap change already

Hmm. I guess that's true, it's only a factor if a company like falls off the s&p500 entirely and is replaced by a different company, which is much rarer and other than an enron type event pretty unlikely to happen to one of the top ten

# ? May 1, 2024 03:18

Hadlock: Nov 9, 2004

Lockback posted:

If the new car division was the one responsible for the cyber truck then firing them is too good for them.

I don't want this to turn into a Tesla bashing thread (at least two already exist that I'm aware of) but they recently paused cybertruck sales due to a literal fatal flaw where the trim plate on the gas pedal could slide off and trap the pedal in the down position, it's possible they needed a culture reboot

# ? May 1, 2024 03:19

Lockback: Sep 3, 2006; All days are nights to see till I see thee; and nights bright days when dreams do show me thee.

Fed is keeping rates where they are (no surprise here) but also going to be slowing down Quantitative Easing, which is interesting and the market seems happy about. Sounds like they are backing off the inflation reduction blitz slightly.

# ? May 1, 2024 20:07

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# ? May 2, 2024 04:13

LanceHunter: Nov 12, 2016; Beautiful People Club

There was definitely a weird bump that happened in the market once the announcement was made, but it went away pretty quickly (though things are overall still positive for the day).

Here's what the NY Times had to say about it...

quote:

Here are a few key takeaways from Powell�s press conference.

� The Fed still thinks that its next move will be a rate cut, and Powell clearly said that further rate increases are "unlikely."

� Still, it is not clear how much the Fed will manage to cut rates this year. Inflation is cooling more slowly than officials had expected.

� Powell avoided commenting on whether three rate cuts are still possible this year: That was the Fed's forecast as of March, but investors now expect fewer reductions.

� Powell said that he thinks that the current rate setting is weighing on the economy, and that it will continue to do so over time.

� The upshot? We may be headed for a longer period of high rates. For consumers, that means mortgages and credit card rates could stay pricey for a while.

quote:

What to know about the Fed�s rate decision.

Federal Reserve officials left interest rates unchanged and signaled wariness about the recent pace of inflation, a hint that they may keep borrowing costs high for longer.

The Fed concluded its two-day policy meeting Wednesday, releasing a statement that included a few important changes from the last one in March. Central bankers reiterated that they needed �greater confidence� that inflation was coming down before reducing interest rates from 5.33 percent, where officials have held them since July.

�In recent months, there has been a lack of further progress toward the committee�s 2 percent inflation objective,� the statement added.

Jerome H. Powell, the Fed chair, expanded on that at a news conference, explaining that �readings on inflation have come in above expectations,� and that gaining greater confidence that inflation was returning to target would likely �take longer than previously expected.�

But investors responded favorably to something Mr. Powell went on to say: that officials still expect their next policy move to be a rate cut, and that further increases are �unlikely.� The S&P 500 index was around 1 percent higher while Mr. Powell was speaking.

The Fed is facing a complicated economic juncture. After months of rapid cooling, inflation has proved surprisingly sticky in early 2024. The Fed�s preferred inflation index has made little progress since December, and although it is down sharply from its 2022 highs, it remains well above the Fed�s 2 percent goal � calling into question how soon and how much officials will be able to lower interest rates.

Fed officials expected to make three interest rate cuts in 2024 as recently as March, but inflation�s recent stubbornness has made that look less likely. Many economists have begun to push back their expectations for when rate reductions will begin, and investors now expect only one or two this year. Odds that the Fed will not cut rates at all this year have increased notably.

Policymakers are mainly watching inflation as they try to decide what comes next with rates, though they are also likely to keep an eye on the momentum in broader economy.

Economists generally think that when the economy is hot � when companies are hiring a lot, consumers are spending and growth is rapid � prices will increase more quickly. Companies are more likely to raise wages as they compete for workers, and they will try to raise prices to cover their climbing labor costs. Consumers who are earning more are less likely to balk at heftier price tags.

But for months, Fed officials have been expressing comfort with the economy�s continued strength. Growth and hiring have not slowed down as much as one might have expected given today�s high interest rates, but policymakers were willing to embrace that resilience because inflation was falling anyway.

Now that inflation appears to be flatlining, though, officials may watch the economy�s vigor more warily.

A key measure of wages climbed more rapidly than expected this week, home prices rose more quickly than forecast, manufacturing looks strong, and economists are now closely watching a jobs report scheduled for release on Friday for any hint that hiring remains robust.

There are hints that the economy could cool. Overall economic growth slowed in the first quarter, though that pullback came from big shifts in business inventories and international trade, which often swing wildly from one quarter to the next. Small business confidence is low. Stock indexes fell in April. Job openings have come down substantially.

Economists also expect inflation to begin to come down again in the months to come, in particular as rent increases fade from key price measures.

Mr. Powell said Wednesday that he thinks policy is weighing on the economy, based on recent economic data, and said that he thinks another rate increase would be �unlikely.�

�I do think it�s clear that policy is restrictive,� he said. �We believe that over time it will be sufficiently restrictive.�

Fed officials also announced a plan on Wednesday to shrink their balance sheet of bond holdings more slowly. The Fed�s balance sheet exploded in size as the central bank snapped up securities during the pandemic, and officials have paring it down for months by allowing securities to mature without reinvesting the proceeds.

By making that process more gradual, officials hope that they will be able to reduce their footprint in financial markets without risking a market rupture. Officials had hinted that a balance sheet plan was coming.

# ? May 1, 2024 21:14

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